UAL asks to pay tax under state amnesty

$1 million seen in saved interest

October 30, 2003|By Bloomberg News.

United Airlines parent UAL Corp. has asked a bankruptcy judge to allow the payment of overdue income taxes to Illinois under an amnesty program that may save the company at least $1 million in interest.

The Elk Grove Township-based company filed an emergency motion Tuesday in U.S. Bankruptcy Court in Chicago seeking permission to pay taxes due as long ago as 1986. The amnesty program lets taxpayers who pay up before Nov. 17 avoid interest and penalties, which double after the deadline.

"The amnesty program presents United with the opportunity to significantly reduce its tax liability," the motion said.

U.S. Bankruptcy Judge Eugene Wedoff will consider the motion at a hearing Thursday.

UAL is trying to complete the largest airline bankruptcy reorganization ever by the middle of next year. While the savings in tax payments would be relatively small, the carrier is looking to save money wherever possible in its effort to cut costs and shed debt.

"We want to pay whatever potential liabilities we have now without paying penalties and interest," UAL spokeswoman Jean Medina said.

Medina said the carrier has not determined the amount of back taxes owed and the savings it would realize by participating in the amnesty program. She said the company would be able to get a refund if it overpays its taxes.

The motion filed with the court said the company's interest on taxes owed in 1986-87 alone probably would exceed $1 million, while the total back taxes owed for that year would be less than $200,000.

The motion said the 1986-87 tax bill is one of at least two potential tax liabilities that the company may owe to Illinois.